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Author Topic: Silver Market - 6 Ways to Profit From Unknown eBay Silver  (Read 1392 times)
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tamo42
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« on: 2010 Dec 20, 12:47:57 am »



In my previous post on sterling silver showing super bullish sentiment, I mentioned that I might show everyone how to get silver for less than spot value on eBay.

So here we go.

The key to buying silver on eBay for less than spot is to look auctions that are below spot to begin with.  Usually, these will be items that are broken.  Jewelry and sterling serving pieces are probably the most common item.  

Let's walk through an example.


733 grams Scrap Sterling Silver


OK, there are a couple things to note here.  

When you click on the above auction, you'll see that this seller is in Canada.  If you are Canadian, then the list price of $565 + $16 shipping applies to you.  If not, you'll have to convert that to your local currency.  For me, that's US Dollars.  Fortunately (?!) the USD and CAD are about at parity, so they prices are about the same.

The second thing to notice is the description in the title: 733 grams and 21.8 ounces.  This is super important: most people don't know what troy ounces are.  When you hear that silver is at $29 per ounce, or gold is at $1400 per ounce, that means per troy ounce!  The kind of ounces you read on scales in your kitchen are called Avoirdupois ounces.  They are similar, but not the same!  So here's expert tip #1: use the weight measured in grams, always.

So far, so good.  We know the weight of the objects in grams (technically mass is measured in grams, but I'll leave the science geek stuff aside for now).  We know that the listed price is in Canadian Dollars (CAD).  Now, let's look at the description:

The base plate, cement, and steel washer in the candelabra have all been removed.

What this refers to is the candelabra.  Often times, large silver objects are what is known as "weighted."  This means they are filled with various things in order to make them heavier.  It is important for a candelabra to be heavy so it doesn't tip over and light your table on fire.  This is something you really have to be aware of when bidding on items that in any way might be hollow or have weighted pieces in them.  It would be a huge loss to pay silver prices for a weight of lead.  Know that you are bidding on silver content and not weighted content.

Now that we have determined the actual mass that is silver (sterling silver) in this case, it's time for the math.

Is this a good deal?

733 grams of sterling silver is actually 678 grams of pure silver.  As I'm writing this, silver is trading at 29.31 $/ozt, which means 678 grams is worth $639.

So this set of sterling silver is selling at...

...

90% of spot value.

This type of thing is an excellent deal for those who are bullish and plan to hold long term.  This is not a good deal if you are planning on flipping this right away.

Why?

The reason is that nobody will currently pay you more than 90% of melt value for scrap silver that actually needs to be melted in order to be useful.  Essentially, you would be paying exactly the effective spot after the melt discount.  This is actually a good deal because when you buy bullion (coins, rounds, bars) you pay a premium on top of spot.  As a result of this rather unfortunate rule of the market, there are 6 ways to profit here.

1, Wait for silver to go above the price at which you bought, then sell.

2, Hold for the long term and sell when you need the cash.

3, Buy things that you can actualy use while you are waiting for the market to rise - like that silver jewelry box.  

4, Buy something that you can enhance and resell.  Add some value to the pieces.

5, Make an offer of less than the listing price and see if you can score a screaming deal.

6, Look for auctions or buy it nows that are going for less than 90% of melt and see if you can score a screaming deal.

That's how you do it - how you profit from eBay silver.  

One more thing.  I realize that a lot of this might be confusing in terms of which numbers are to be used.  So if you want to ask me about a particular auction and what the silver or gold is worth, post your comments and auction numbers here on the eBay Silver and Gold Auction Questions thread.
« Last Edit: 2011 Jan 07, 08:16:42 am by tamo42 » Logged

Neal McSpadden
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« Reply #1 on: 2010 Dec 20, 01:08:40 am »

#3 What silver jewelry box?
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« Reply #2 on: 2010 Dec 20, 01:10:42 am »

In the picture, you can see that the auction includes a silver Tiffany's box and a candelabra.  It's the small silver box on the left hand side of the picture, kind of under the arm of the candelabra.
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« Reply #3 on: 2010 Dec 20, 01:15:09 am »

Oh, I see. Got it. GREAT POST! How will you deal with all the ravenous hordes of silver seekers competing with you on eBay now? Your secret is out!
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If families are a problem for the system, then we must reject the system, not the families.
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« Reply #4 on: 2010 Dec 20, 01:17:18 am »

Oh come now.  I have more secrets than that Wink.
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« Reply #5 on: 2010 Dec 20, 01:29:52 am »

"Oh come now"? That's so 19th century. How long have you been hiding your secret money-making formulas?
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If families are a problem for the system, then we must reject the system, not the families.
Founder of the Coin Compendium (forum, blogs, calendar, images, donate, contribute).
LBC makes you rich, with a free ebay gift certificate awarded every month!
The Coin Compendium and the china-mint.info forum, censure, disclosure.
Do not PM questions. Answers should be publicly available.
Backup is not enough. Protect your data with MultiPar.
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« Reply #6 on: 2010 Dec 20, 01:32:03 am »

Well, my oldest coin is from 1855.
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« Reply #7 on: 2010 Dec 20, 08:10:36 am »

Wow, such a deal indeed. Questions:
a) Where do you store the valuable stuff you cannot use daily? A huge safe or warehouse?
b) Does your home owners insurance protect these aganist theft at replacement value? Any deductibles?
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tamo42
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« Reply #8 on: 2010 Dec 20, 08:22:16 am »

Wow, such a deal indeed. Questions:
a) Where do you store the valuable stuff you cannot use daily? A huge safe or warehouse?
b) Does your home owners insurance protect these aganist theft at replacement value? Any deductibles?

A - Safes are the typical option.  If you own your own home, a heavy safe drilled into the floor or hidden in the wall is relatively secure.  Other options include a safe deposit box at a bank, a trusted friend/relative.  If you want to get really creative, there were stories during WWII of Jews casting their precious metals as tools.  They then took these "tools" with them through checkpoints and fooled those looking to steal from them.  All this depends on how much you have.  One set of candlesticks probably won't warrant this elaborate.  The more you have though, the more you need to protect it.

B - In most cases yes.  But again, details are important.  You should check your homeowner's policy to see if investments are covered, and how much.  There may be certain requirements that you store them in a safe or something as well as how much they will cover.  Also, keeping records becomes much more important when you think you might need to claim insurance later.  You'll need pictures, descriptions (especially weight in this case), receipts, and so on.
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« Reply #9 on: 2010 Dec 20, 02:33:38 pm »

I wouldn't store them anywhere obvious. For example, if you get a safe for your home, make sure it doesn't look like a safe, and make sure nobody but you knows about it, or people will threaten your children to get you to open it up for them.

If you get a bank safe deposit box, get it at a bank where you don't have an account, and don't tell anyone about it. Put it in your will in case you die, then don't tell anyone about your will. Just leave it sealed in trusted hands, and check it from time to time to make sure the seal hasn't been opened.

If you leave it with a friend, make sure your friend doesn't know what it is, same as with having a safe at your home. Take an old bike and stuff the tubes with your treasures, and ask if you can store them in your friend's attic. Make sure it's something that wouldn't be odd if you checked on it frequently. How about potted plants? Be creative.

Your first, last, and only real line of defense is security through obscurity, because you probably can't afford a private army to protect your valuables (the police don't work for you, trust me on that one - they're FAAAAARRRRR more likely to steal your valuables than any random common criminal is).
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If families are a problem for the system, then we must reject the system, not the families.
Founder of the Coin Compendium (forum, blogs, calendar, images, donate, contribute).
LBC makes you rich, with a free ebay gift certificate awarded every month!
The Coin Compendium and the china-mint.info forum, censure, disclosure.
Do not PM questions. Answers should be publicly available.
Backup is not enough. Protect your data with MultiPar.
Writer of LBC Chinese coin investment articles (list).
About me: User:Badon - MediaWiki.org
Badon effect: type 1 to 8, type 9.
I type faster on a TypeMatrix.
Use my work. Give credit.
Coin, medal, whatever!
Coin storage advice.
FreeArc is amazing.
User contributions for Badon - Coin Compendium
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